District Court Blocks Attempt to Bar New Prior Art References Based on IPR Estoppel

“The Court ultimately was persuaded by MRSI’s evidence on the whole and concluded that it was ‘more probable than not that a skilled searcher conducting a diligent invalidity search concerning the ’327 Patent reasonably could not have been expected to discover the Harigane and Ueno references.’”

The U.S. District Court for the District of Massachusetts on May 4 denied a motion for partial summary judgment by Palomar Technologies, Inc., holding that the estoppel bar relating to inter partes review (IPR) proceedings did not apply to two prior art references that had not been raised in a prior IPR hearing at the Patent Trial and Appeal Board (PTAB).

Patent and Prior Art

https://depositphotos.com/9308443/stock-photo-stop-go-sign-illustrations-over.htmlPalomar brought suit against MRSI Systems, LLC in the Southern District of California on July 6, 2015 for infringement of Palomar’s U.S. Patent No. 6,776,327. In October of 2015, MRSI petitioned the PTAB for IPR of all 48 claims of the ‘327 Patent on the grounds of anticipation or obviousness based on five prior art references. The PTAB instituted and ultimately upheld 47 of the 48 claims.

Following the PTAB decision, the district court proceedings were transferred to the Massachusetts court in February 2018. Palomar filed a motion for partial summary judgment arguing that MRSI was estopped under 35 U.S.C. § 315(e)(2) from using the asserted prior art references to challenge the patent’s validity, and the court held that “all challenges based on prior-art references on which the PTAB based its final written decision, as well as five other references that MRSI cited but did not specifically assert” were barred under the statute.

However, regarding two other asserted references, the court ruled that an evidentiary hearing was necessary to determine whether MRSI knew about the references at the time of the PTAB hearing. Those two references were U.S. Patent 5,035,047 (the Harigane reference) and PCT Patent Publication 01/72097 (the Ueno reference).

The court noted that “a prior-art reference not raised in the IPR proceeding is subject to the statutory bar of 35 U.S.C. § 315(e)(2) if (1) the IPR petitioner actually knew of the reference or (2) a skilled searcher conducting a diligent search reasonably could have been expected to discover the reference.”


The Experts

Palomar presented expert witness testimony by Steve Kunin, a frequent IPWatchdog commentator and panel participant, and former Deputy Director for Patent Examinations at the USPTO. Kunin testified that “a skilled researcher conducting a reasonable search would have located both the Harigane and Ueno references.” He said that MRSI had identified another patent, U.S. Patent No. 5,446,960, which was cross-referenced in class 29/740, as were both Harigane and Ueno. “Using Isaacs as a starting point, a properly targeted keyword search would have located both references,” said the court, summarizing Kunin’s testimony.

However, MRSI’s fact and expert witnesses testified that two different search vendors and a law firm failed to discover the references; that the search methodology outlined by Kunin was not the typical approach used for MRSI’s situation or starting point; and that the fact that the references located in the initial search led to the institution of an IPR indicates it was a relatively strong search. MRSI’s expert witness, Robert Stoll, also a long time IPWatchdog source and former USPTO Commissioner for Patents, said that, in his view, “Kunin was describing a ‘scorched-earth’ methodology of prior art searching, which did not align with what a skilled searcher conducting a diligent search would actually do.”

Court’s Analysis

In its analysis, the court considered that Palomar had presented no evidence proving “or even casting doubt on” MRSI’s contention that it had no actual knowledge of the references at the time of the IPR, and that MRSI’s searchers and fact witness had presented adequate testimony and evidence showing that there was no actual knowledge. This satisfied prong one, the subjective prong of the estoppel bar, in MRSI’s favor.

As to the objective prong of the estoppel bar, the court weighed various objections by MRSI to Kunin’s testimony, which it found credible and considered as part of its analysis. Ultimately, the court found that “Kunin did not provide a compelling reason why a reasonably diligent searcher, at the beginning of the search, starting only with the ’327 Patent, and without knowing where he wanted to wind up, would focus the search effort solely on classes 29/740 and 29/739.”

The court further found that Kunin’s proposed search strings were “clearly developed with the benefit of hindsight,” and did not give substantial weight to his testimony as to what an objectively reasonable search would have entailed.

While the court characterized MRSI’s evidence on the objective prong as “thin” and the testimony as being “at a high level of generality, with relatively little detail as to actual contours of a reasonable search, and virtually no evidence as to appropriate search strings,” it ultimately was persuaded by MRSI’s evidence on the whole and concluded that it was “more probable than not that a skilled searcher conducting a diligent invalidity search concerning the ’327 Patent reasonably could not have been expected to discover the Harigane and Ueno references.”

The judge then outlined 11 factors established by a preponderance of the evidence to meet the objective prong. The second factor states: “There is no set way to conduct an invalidity search, and reasonable experts could and do disagree as to the approach to take in a particular case.”

Thus, despite the outcome of the IPR, MRSI is now free to assert invalidity grounds based on the Harigane and Ueno references.


According to a press release published by one of the firms representing MRSI, Sheehan Phinney Bass & Green PA, this was the “first-ever bench trial on whether estoppel based on prior art from an earlier inter partes review before the [PTAB] applies to newly-found prior art references asserted subsequently in a district court litigation.”

Firm shareholder Peter Nieves told IPWatchdog that the case has clarified for patent attorneys that there is no need to decide between filing an IPR or seeking invalidation at the federal district court. “There has always been the option to do both,” said Nieves. “It just needs to be done properly.”

Nieves said the level of detail Chief Judge Saylor provided will serve patent attorneys well, and should serve as guidance for other courts tackling this issue:

For years, attorneys have been deciding between filing an IPR or seeking invalidation at the federal district court….Chief Judge Saylor correctly makes it clear that just because a prior art reference reasonably could have been found, it does not mean that it is reasonable for the skilled searcher to be expected to have discovered the prior art reference with a diligent search. Anyone can reverse engineer a search when you know the target prior art reference. That is why the test cannot be whether the prior art reference reasonably could have been found.

Palomar had not responded to a request for comment as of the time of publication.

In addition to Nieves, Sheehan shareholders Robert Lucic and James Harris, and associate Bryanna Devonshire served as co-counsel to MRSI with Crowell & Moring partner Brian Paul Gearing, counsels Ali Tehrani and Zach Ruby, and associate Michelle Chipetine.

Image source: Deposit Photos
Copyright: alexmillos
Image ID: 9308443 


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Join the Discussion

14 comments so far.

  • [Avatar for Anonodog]
    June 6, 2020 05:19 pm

    This is a sj denial. Why does anyone care? Non final decision aint it?

  • [Avatar for Night Writer]
    Night Writer
    May 18, 2020 07:03 am

    I will note that the court’s position has no basis in the reality of prior art nor in the application of 103. Cumulative prior art is usually very easy to find, which should not be a surprise as once something is known it becomes rapidly adopted if it has any use and there are scores of people that copy things and attempt to claim it as their own.

    It also has no correspondence to what an expert in a field is. An expert in a field doesn’t know all the references, they know the important references.

  • [Avatar for Anon]
    May 17, 2020 10:15 pm

    Night Writer,

    As you are full aware, “beat on” on varying results, depending on a number of factors.

    For example, for someone like Paul Morgan, who is vocal across several patent law blogs, “beat on” is LESS needed because those who read him will recognize that when he goes silent, he just does NOT have a position that he feels that he can defend. In such cases, Merely showing the counter point is often effective to nullify the spin that Morgan wishes to impart.

    Mr. Williams, may well be quite different. I have not seen comments from this individual previously (leastwise that are memorable). He also has a view that is not entirely irrational — on e that merely sound TOO EASY in a Rational Actor mode that may not align with what is best for innovation.

    I would hope that with the likes of Mr. Williams, that engagement would be better – and that “beat on” (while perhaps possible) is not as promising as ‘sussing out” the particulars of why Mr. Williams feels as he does, and how he might react to opposing views.

    Sometimes this causes the other person to seriously think about the position that they have staked forth. Sometimes not – at times there is but a ‘drive-by monologue.’ Either way, the absence of engaging on the merits shows serious readers all that they need to see in regards to the attempted viewpoints.

    I dare say that those who are repeat posters – like Mr. Morgan – this effect is MORE debilitating, as it reinforces the view that Mr. Morgan is merely a mouthpiece for a certain viewpoint and is either incapable or unwilling to fully engage — as the result of the engagement would be opposite of their desired spin.

  • [Avatar for Night Writer]
    Night Writer
    May 16, 2020 06:20 pm

    Anon @6 and 8

    You need to beat on these people more. Their positions are so wrong.

  • [Avatar for Adam]
    May 16, 2020 05:26 pm

    This is insane. Participation trophy, meet the law.

    It’s widely and publicly available in electronically searchable databases.

    Truly a crazy standard.

  • [Avatar for Peter Corcoran]
    Peter Corcoran
    May 16, 2020 01:36 pm

    So reasonable searchers are not expected to search the relevant classes for prior art? The court’s “well reasoned” analysis encourages incompetence (like the opinion itself) and multiple bites of the apple for infringers when estoppel should clearly apply. I’d have no problem appealing this decision.

  • [Avatar for Anon]
    May 16, 2020 06:50 am

    Mr. Williams,

    I do not think that you grasp the nuance here, This is LESS about the court having leeway as to admit one search over another and MORE about the deeper pockets that CAN elevate the search from a level of what an ordinary real person may be able to do (the Stoll model) up to a level of scorched Earth (the Kunin model) in order to defeat a granted patent.

    This decision carries an implicit gift to the more well heeled ESTABLISHED powers that have yet another tool of competing on non-innovation grounds.

    Power and responsibility are out of alignment here. This decision does NOT take that into accord.

  • [Avatar for Frank T. Williams]
    Frank T. Williams
    May 15, 2020 01:35 pm

    Interesting case. In reading the opinion, seems the court shows that if a strong search is done after IPR, new prior art not known of before the IPR can be presented to invalidate in court. Seems appropriate, especially if the PTAB doesn’t do a great job in the IPR and now all known prior art is dead to the court. It doesn’t seem to say that any new prior art could be found, or would qualify because that would be up to the court. Just that the option is there and there isn’t an automatic estoppel. Pretty good law.

  • [Avatar for Anon]
    May 15, 2020 12:17 pm

    I would have to disagree with your last statement, Mr. Morgan.

    Congress knows full well how to write a law to provide a strict “either/or” approach.

    Nowhere is such in sight.

    You may be being confused by some of the Kool-Aid provided to the masses on the ‘selling’ of the AIA, but that is simply not reflective in the wors of the law.

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    May 15, 2020 10:41 am

    This is an interesting case on the scope of IPR estoppel against the Petitioner or its privy using later-found patents or publications against that same patent. The “too difficult to find” excuse or exception for that is in both the reexamination and IPR statutes, and needs clarification by the Fed. Cir. itself. But clearly the attorney assertion that there is “..no need to decide between filing an IPR or seeking invalidation at the federal district court. There has always been the option to do both ..It just needs to be done properly” was not the intent of either of those intended litigation reduction systems for patent or publication prior art.

  • [Avatar for NewLawSchoolGrad]
    May 14, 2020 02:37 pm

    Would be interesting to see if MRSI had to disclose exactly how (and when) the 2 new prior art references were located. That would at least shed more light as to how unique (or not) their methods for locating these references truly were.

  • [Avatar for Night Writer]
    Night Writer
    May 14, 2020 01:21 pm

    >>Anyone can reverse engineer a search when you know the target prior art reference. That is why the test cannot be whether the prior art reference reasonably could have been found.

    Wow. Too bad they don’t do this with 103.

    Also, this is fairly outrageous as there are always duplicate references when doing these searches. The standard should be whether the new reference discloses something substantially more than the references at the USPTO and whether they could have been reasonable found.

    The fact is that normally there are 10’s to 1000s of references that can be used in obviousness arguments that are nearly identical in their disclosures.

  • [Avatar for Josh Malone]
    Josh Malone
    May 14, 2020 09:57 am

    So PTAB is not faster and cheaper after all. Can we get rid of it now?

  • [Avatar for Anon]
    May 14, 2020 08:40 am

    An interesting case, and one that shines a bright spotlight on the difference between a juristic legal fiction (PHOSITA) and a ‘real person’ like*** entity in regards to ‘knowing’ what is out there.

    *** ‘like’ in this sense is used expressly because the notion of ‘real person’ in this instance ALSO includes a portion of juristic persons. What we see here may be deemed to be an unfortunate partitioning of juristic person to set a corporation to have the best of both worlds. The juristic person of a corporation obtains the benefits of “a real person would not be aware of THAT” at the same time gets the benefit of a different juristic person’s ability to BE all-knowing in being able to use what a real person could not find to establish the ‘knowing’ of the legal fiction juristic person of PHOSITA.

    Mind you, this observation is NOT that the law was improperly applied here.

    Being consistent about the powers of PHOSITA points to the establishment of what constitutes proper prior art.

    The issue — if there be one — is the legal set-up of the estoppel provision. Did Congress realize a difference between what is reasonable FOR an actual real person and what is reasonable FOR a juristic person of a corporation? Should there be a recognized difference? Should the ‘scorched Earth’ methodology of the Kunin-reasoning trump the “let’s look at what a real person could actually do” methodology of the Stoll-reasoning?

    Here, the court ‘went for’ the ‘real person could actually do’ reasoning.

    In doing so, they chose in a very real sense to have an UNBALANCED effect, and have provided Corporatocracy yet another advantage.

    If I were the judicial body here, I would have attached responsibility to the power of the juristic power of corporatehood.

    Uncle Ben would have understood.

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